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Why did the EU-China investment deal fall off after such a promising start?

Abhyoday Sisodia by Abhyoday Sisodia
May 28, 2021
in Europe
Why did the EU-China investment deal fall off after such a promising start?

(PC Bloomberg)

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It is said that there are no rights and wrongs in international diplomacy, and it is a very turbulent domain as different participants find themselves in positions of domination or vulnerability at different times which leads to the changing dynamics of negotiations during discussion and deliberation. The European Parliament has voted to freeze discussions on an investment deal with China until Beijing removes the retaliatory sanctions it imposed on EU officials, diplomats, academics, and researchers in March.

The motion stalls a deal that was agreed to much fanfare by top EU and Chinese leaders in December. The Comprehensive Agreement on Investment (CAI) needs the parliament’s blessing before it becomes law, but members voted not to even consider this while the sanctions remain in place. During the time of the Trump administration and especially during the last moments, China feared excessive actions by the USA and thus in its desperation agreed to go for a more European Union friendly investment deal. However, as soon as Joe Biden took office as the US President, the Chinese Communist Party thought that it was in a stronger position to make the deal more favourable to itself and employed the infamous wolf warrior diplomacy for ensuring the same.

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The one new thing that happened in the foreign policy structure of the Chinese Communist Party was the introduction of the wolf warrior diplomacy, as part of which the diplomats and representatives of China in different countries used all types of verbal intimidations to those whose views were not in line with what is acceptable to Beijing. However, after almost more than a year of free run, it seems the European Union has had enough of this.

Read more: China’s wolf warrior diplomacy backfires spectacularly in Europe as the EU votes against the investment deal

A joint motion which was later seen by the South China Morning Post dated May 18, was supported by all major parties, including the European People’s Party (EPP), a centre-right, a pro-business grouping which had previously been on the fence about rejecting the deal. The text shows the rejection of the Comprehensive Agreement on Investment (CAI) as part of a broad package of resolutions aimed at hitting back at China on human rights and political issues.

The motion says “any discussion on ratification by the European Parliament, have justifiably been frozen because the Chinese sanctions are in place”, adding that Beijing must “lift the sanctions before dealing with CAI, without prejudice to the final outcome of the CAI ratification process”

The European Union has observed that they have an upper hand now and will get the most of pushing the Chinese Communist Party to toe its line. It also recognises that the USA has been pushing against the deal, and agreeing to the deal without a clear decisive upper hand will be counterproductive given China does not plan to honour the deal, and will use wolf warrior diplomacy anyway. Thus, the EU has decided to pursue alternative destinations more seriously. For example, the obvious alternative to China is India. Its embrace of the Indian option in the post Pandemic world is the most apparent signal for the same.

Tags: ChinaComprehensive Agreement on InvestmentEU
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Abhyoday Sisodia

Abhyoday Sisodia

M.A. in East Asian Studies, Department of East Asian Studies, the University of Delhi, India. Deep interest in geopolitics, foreign policy and world affairs.

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